29th April 2014

[SINGAPORE] Singapore must continue with its restructuring efforts
as the country enters a new phase of development, said Acting Manpower Minister
Tan Chuan-Jin.

This must be done if the Republic is to achieve its vision of
making "better workers, better jobs", he wrote in his annual May Day
Message, released yesterday.

He stressed that the tripartite partners - government, employers
and unions - must work closely together as the economy undergoes a
transformation to create higher-value industries and quality jobs for all
Singaporeans.

The government, on its part, is committed to helping workers at
all levels adapt to this new economic environment, said Mr Tan.

SINGAPORE: Singapore must continue with its restructuring
efforts to achieve its vision of making "better workers, better
jobs", Acting Minister for Manpower Tan Chuan-Jin said in his May Day
message.

He added that only then can Singapore achieve its vision of
making "better workers, better jobs".

Mr Tan also stressed that the tripartite members -- government,
employers and unions -- must work closely together as Singapore transforms its
economy to create higher-value industries and quality jobs for Singaporeans.

The Singapore economy is expected to grow between two and four
per cent this year. The labour market remains tight with close to full
employment.

The acting manpower minister said the government is committed to
help workers adapt to the new economic environment.

One key area is continuous learning and skills upgrading.

Mr Tan said the Continuing Education and Training system is
undergoing a major review to support workers in these areas so they can seize
the new job opportunities that restructuring brings.

Companies are also embarking on training which is more relevant
now.

Kurt Wee, president of Association of Small & Medium
Enterprises, said: "We are exploring modules that have subject matters
like… Do Not Call registry, your personal data protection act, so that the
workforce that comes through the training workshops are also more relevant,
more industry relevant, towards their employers."

Companies will also get help to transform existing business
models, so they can create better opportunities for workers.

Businesses are encouraged to innovate and strive for
productivity improvements and in turn, raise the wages of workers.

Mr Tan acknowledged the process is not easy for employers.

He is heartened the unions have been engaging companies to tap
different funding schemes, such as the Inclusive Growth Programme and
Productivity and Innovation Credit.

Echoing the call, Singapore National Employers Federation
President Stephen Lee said employers must invest in the training of workers to
enable them to take on larger and higher job roles.

He urged employers to engage and empower workers to motivate
them to give their best, and to cultivate a workplace culture that encourages
innovation and continuous improvements in work processes.

The Employment and Employability Institute (e2i) has also been
active in its mass adoption programme since last year.

Ang Li May, deputy CEO at e2i, said: "Companies in the same
sector, they are able to share best practices with each other, they are also
more likely to require similar type of equipment, and they will be better able
to share with each other what the equipment that potentially work well for them
are."

The Institute has been operating at the new Devan Nair Institute
for Employment and Employability since August last year.

It has one-stop centres to help groups of low wage workers and
professionals, managers and executives.

Prime Minister Lee Hsien Loong will deliver his May Day Rally
speech at the Institute on Thursday.

Weak rental demand and tight loan curbs hammered private home resales
again last month, deepening the gloom that has settled over the overall
property market since the start of the year. The price slide picked up speed
from January to last month, according to Singapore Residential Price Index
flash estimates out yesterday, with experts tipping worse to come.

Developers turning more cautious as home prices
and sales volumes fall

Source: Business Times / Top Stories

[SINGAPORE] With home prices slipping, sales volumes waning and
more supply coming onstream, land bidding is starting to reflect developers'
cautious mood.

Singapore land prices are expected to soften this year, as
developers restock their land bank in a conservative fashion with an eye on net
margins - which analysts are expecting to hover around 10 per cent this year
based on residential launch prices.

"This could present a turning point in the once-red hot land
market," BNP Paribas analyst Chong Kang Ho said. "Our view is that
the land market could soften further in the second half of 2014 with developers
turning more cautious, especially if home prices fall further and new launches
continue to stagnate."

DBS Research analyst Lock Mun Yee said that she expects land
bidding prices to "reflect where selling prices will trend towards".

New home prices could fall by 5 per cent this year while sale
transactions may shrink by 20 per cent compared to last year, Ms Lock predicts.

It is not only the new launches that are facing downward
pressures. Last month, prices of completed condos fell 1.1 per cent month on
month, going by the Singapore Residential Price Index released by the NUS
yesterday, which is based on a basket that tracks the month-on-month price
movements of private homes.

Developers that have already purchased land from the Government
Land Sales programme could see their net margins staying at 9-10 per cent, down
from 24 per cent in 2012, Mr Chong

said.

Margin compression is holding developers back from aggressive land
bidding now.

An analysis of winning bids by BNP Paribas shows that the margin
buffers - the difference between the prevailing price of launches in the
vicinity and the development costs of the land - has widened, suggesting that
the developer wants more cushion from the risk of lower selling prices.

A case in point is the recent winning bid for the 99-year
leasehold site at Prince Charles Crescent (Parcel B), which has a margin buffer
of about 16.7 per cent above the historical mean of 11.9 per cent, BNP Paribas
estimates.

Foreign developers have often been blamed for bidding up land
prices.

BNP Paribas' analysis shows that foreign developers are indeed
more aggressive in their bids. They have a smaller margin buffer of 10.6 per
cent than the overall market sample of 11.9 per cent on average, while their
winning bid premium over the median bid also tends to be higher at 20.2 per
cent compared to the total sample mean of 17.8 per cent.

Chinese developer Kingsford, for instance, secured two sites in
Upper Serangoon last December at a bid premium of 23-27 per cent over the
median bids.

According to SLP International, foreign players' participation
rate has increased to 26 per cent last year from 8 per cent in 2009, mainly
bolstered by the entry of Chinese developers that tend to favour executive
condominium (EC) sites.

The average land costs of EC sites have risen to $330 psf last
year from $270 psf in 2011, BNP Paribas' Mr Chong said.

During this period, EC launch prices also increased to $800 psf,
up from $700-750 psf.

With the "potential bottoming-out process in the land
market", well-capitalised developers such as CapitaLand, Keppel Land and
City Developments have the opportunity to restock their depleting land bank at
lower prices, Mr Chong said.

Non-traditional developers that include niche boutique Singapore
developers, construction firms and foreign developers saw their share of
winning land bids rise from 18.3 per cent in 2009 to 71.5 per cent last year.

This has fallen to 63 per cent year-to-date, reflecting easing
competition for land, he said.

More people are renting out their homes for short periods, despite the
growing awareness that it is illegal. The Housing Board investigated 184 cases
of short-term leasing in public flats last year, a 73 per cent increase from
106 cases the year before.

Mamoru Kohda, who scouts the globe for properties for Japan’s Daisho Co., began looking for a hotel in Singapore in early 2013. Within a year, the property investor and developer had acquired the newly opened Westin in the island-state’s financial district for a record price.

“Singapore’s hospitality market will continuously grow, supported by tourists and corporate travelers,” Kohda, a director at Daisho Development Singapore Pte in Brisbane, Australia, said in a phone interview. He travels the world seeking assets for the company, which has more than $1.5 billion in property holdings.

Singapore is attracting hotel chains such as Accor SA and the InterContinental Hotels Group Plc, which are both adding new properties in the island-state, where the average daily hotel room rate is the highest in Asia. Accor will open its Sofitel So brand in the business district next month and its first Ibis Styles brand in Singapore in 2016, while InterContinental opened its Holiday Inn Express in the city’s nightlife hub of Clarke Quay in March.

Investors are gravitating to Singapore because of a record number of leisure and corporate visitors and a scarcity of properties to buy. Tourist arrivals in Southeast Asia’s biggest financial center are forecast to hit a record and daily room rates exceed those in Tokyo and Hong Kong, cities with among the highest hotel rates in the region.

Eleven hotels valued at S$2.45 billion ($1.95 billion) were sold in Singapore last year, four times the total in 2012, according to deals tracked by property broker Savills Plc.

‘Aggressive Bidding’

“We are seeing some pretty aggressive bidding just to get into Singapore,” said Robert McIntosh, executive director at broker CBRE Group Inc.’s Asia-Pacific hotel business in the island-state. “Some of the landmark iconic properties, which are extremely well sought after, aren’t driven just by income, but by long-term capital gains.”

Visitor arrivals in the city off the tip of Malaysia are forecast to grow as much as 8 percent to a record 16.8 million this year from 2013, while revenue may climb by as much as 5 percent to S$24.6 billion, the Singapore Tourism Board forecasts.

Singapore accounted for 16 percent of a record 143 deals valued at $13.4 billion in the Asia-Pacific region last year, according to CBRE. That’s an increase in hotel sales from a 6.8 percent share of deals in Asia in 2012, CBRE data showed.

Record Visitors

The island-state attracted a record 15.5 million visitors and business travelers in 2013, according to the tourism board, with events such as Formula One’s night races with concerts featuring singers such as Rihanna and Justin Bieber, and attractions including a S$1 billion downtown park with a flower dome of plants from around the world that opened in 2012.

Singapore retained its position as the world’s leading place to hold conferences in the latest global rankings by the Brussels-based Union of International Associations. Events included SkyBridge Capital LLC’s inaugural Asian hedge fund conference in 2012, modeled on the company’s popular SkyBridge Alternatives Conference in Las Vegas.

The Marina Bay Sands, a four-year-old resort, retail and restaurant complex, dominates the city’s skyline, and houses a casino built by U.S. billionaire Sheldon Adelson’s Las Vegas Sands Corp. at a cost of $6 billion. Resorts World Sentosa, built by Genting Singapore Plc for S$7 billion in 2010, houses Southeast Asia’s only Universal Studios theme park.

‘Strong Market’

“Singapore is a very strong market and one of our top markets in Asia,” said Michael Issenberg, Accor’s chairman for the Asia-Pacific region. “Demand is high as Singapore does a great job with the conferences, leisure and corporate sector and a lot of airline business, it’s got a good mix.”

The average daily hotel room rate in Singapore was $206 in 2013, near the record $209 set in 2012, according to Cushman & Wakefield Inc. That compares with $166 in Tokyo and $185 in Hong Kong, according to the broker.

Tokyo-based Daisho in December bought the 305-room Westin within the Marina Bay business area from a fund owned by BlackRock Inc. for about S$468 million, or a record S$1.5 million per room, according to CBRE.

“Since the hotel is brand new, we considered some price premium,” Kohda said. “The area is developing very quickly and has a very strong pool of office tenants so we thought that the hotel has more potential to grow.”

Daisho has developed overseas projects including the 510-room hotel managed by Hilton Group Inc. in Kuala Lumpur and the Park Hyatt Sydney hotel that it refurbished in 2012, according to the company.

Rising Revpar

There were no hotel transactions reported in the quarter ended in March because of the gap between buyers and sellers’ expectations on price, according to CBRE. The broker tracked 13 hotel transactions in Singapore last year, five of which sold for more than S$1 million per room, the most number of deals struck above that price, data from the property broker showed.

Revenue per available room or revpar -- an industry measure of occupancy and rate -- in Singapore may increase by 3 percent annually through 2016 for hotels across all lodging categories, Standard Chartered Plc said in a note to clients on March 10. Growth will be driven by arrivals and tourist spending increases of as much as 10 percent per annum as global economic conditions and corporate spending improves, according to the report.

Singapore’s revpar declined 1.4 percent last year amid an increase in supply, said Akshay Kulkarni, regional director of hospitality for South and Southeast Asia at Cushman in Singapore. The revpar rose 0.9 percent to S$214.10 in January, according to the latest data from the Singapore Tourism Board.

Chinese Tycoon

Among properties bought by foreign investors was the 308-room Grand Park Orchard and its shopping mall along Orchard Road, Singapore’s prime shopping belt. It was acquired for S$1.5 million per room by Chinese steel tycoon Du Shuanghua through his Singapore-based company Bright Ruby Resources, Knight Frank LLP said in its third-quarter 2013 report.

“Interest is still very strong for Singapore assets,” said Julien Naouri, associate director of hotels for Asia Pacific at Savills. “It’s a very transparent market and more and more investors from China are wanting to put some money here and hospitality is one of the asset classes they are familiar with.”

While the number of total deals in Singapore will be higher in 2014 than last year, the price paid per room may decline slightly and the number of high-value transactions could drop as it becomes increasingly challenging for investors to find prime hotel assets, Cushman’s Kulkarni said.

Luxury hotels, such as the Ritz-Carlton, Millenia Singapore and Raffles Singapore, was the only group that had an increase in the revenue per available room, up 9.74 percent, in the 11 months to November, according to the tourism board. The measure for upscale, mid-tier and economy segments declined by 10.57 percent, 3.08 percent and 8.64 percent respectively in the period, the tourism board data showed.

‘Long-Term Play’

“Singapore hotel investments remain on the radar of many core investors,” Kulkarni said. “While yields may look low, one must not forget that this is a long-term play with capital appreciation as the bigger game, rather than pure yield play.” Hotel yields ranged from 3 percent to 4.5 percent last year, Kulkarni said.

Demand is also being supported by local investors chasing the assets. Ascendas Hospitality Real Estate Investment Trust bought the Park Hotel Clarke Quay for S$300 million from Parksing Property Pte, a member of the Park Hotel Group, according to a joint statement from the companies in June.

“This is a small little island so there is a scarcity of assets and land,” Tan Juay Hiang, chief executive of Ascendas Hospitality Trust, said in a phone interview. “There is more certainty in investing here than in other parts of Asia.”

Singapore added 15,746 rooms over the past five years while Hong Kong added 14,257, according to CBRE.

RB Capital

Singapore-based RB Capital, a real estate company focused on the acquisition and development of retail, office and hotel properties, in August bought the 223-room Gallery Hotel along the Singapore River for S$1.03 million per room, according to Savills and Knight Frank.

HKR International Ltd., a Hong Kong-based property developer, sold The Sentosa Resort & Spa to Royal Group Development Pte, a Singapore-based property development and management company, for S$210.85 million, HKR said in a filing on Aug. 15.

Luxury Hotels

“We see opportunities in upscale and luxury hotels,” said Bobby Hiranandani, managing director at Royal Group, adding that the company plans to revamp the Sentosa Resort, re-brand it as a Sofitel hotel and position it for conferences. “There is an oversupply of rooms in economy and budget hotels, but no one is building upscale luxury hotels and the existing supply is getting older.”

Demand for hospitality assets in the island-state, 137 kilometers (85 miles) north of the equator with tropical weather all-year-round, will remain intact, with investors unlikely to be concerned by lower returns, said CBRE’s McIntosh.

Singapore added 3,900 rooms last year, the most in three years, and is forecast to add 2,037 rooms this year, according to CBRE. Another 3,000 are expected to be added in 2015, McIntosh forecasts. That could lead to a decline of as much as 5 percent in revenue per available room, he said.

“The sheer weight of capital trying to find a home” is driving hotel acquisitions, said McIntosh. “Investors are ready to accept yields of sub-4.5 percent even for three-star properties.”

Last week, a commercial site in Woodlands attracted strong
interest from developers, including some of the biggest names in the business.
Yesterday, the Government awarded the tender to a consortium of Far East Civil
Engineering, Tannery Holdings and Sekisui House, which had beaten seven other
bids with its offer of nearly S$634 million. That translates to about S$907 per
square foot per plot ratio (psfppr), for the first commercial site put up for
tender since the announcement last November of Woodlands Regional Centre as
Singapore’s Northern Gateway.

The top bid was substantially higher than what the first
development site at Jurong Regional Centre fetched in June 2010. The white site
slated for commercial/residential/hotel use was contested by six parties then
and the top bid submitted by Lend Lease was S$749 million, or S$650 psfppr. The
keen interest in the latest tender is a testament to the confidence in the
upcoming Woodlands Regional Centre, which is in close proximity to Malaysia’s
special economic zone — the Iskandar region.

The growth momentum in Iskandar was given an extra fillip last
week when the Prime Ministers of Singapore and Malaysia spoke after their
annual retreat of the importance of the region and its “complementarities” with
the Republic. Three possible locations for the Singapore station of the
high-speed rail link to Kuala Lumpur have been identified and the
Woodlands-Johor Rapid Transit System is also on track to be completed by 2018.

What does this spell for Woodlands Regional Centre? Does it have
what it takes to be in the ranks of the Jurong and Tampines regional centres,
which have undergone successful transformations?

Although the retail scene in Woodlands is not likely to match what
Jurong can offer in the foreseeable future, the regional centre has its own
unique selling points.

Firstly, Woodlands is the only regional centre with a coastal
waterfront setting and residents can look forward to enjoying views of the
Straits of Johor. The 2013 Draft Master Plan shows that the existing Woodlands
waterfront will be expanded eastwards so that the entire stretch can be opened
for public enjoyment. New residential developments will be built along the
expanded waterfront park, while shipyard facilities in nearby Sembawang will
also be relocated to create more space.

Secondly, job creation is likely to be at full throttle for the
regional centre. Currently, Singapore’s major employment centres are located
far from the north and there is high commuting traffic towards the city and the
west during the peak hours.

This is set to change. The Land Use Plan unveiled last year shows
that one important commercial belt called the North Coast Innovation Corridor
spanning Woodlands, Sembawang, Seletar, Punggol and Sengkang West is expected
to see a buzzing pool of research and development activities that could attract
diverse economic clusters.

Companies planning to have operations in Iskandar could also take
advantage of the improved connectivity between Woodlands and Johor, as well as
between Woodlands and the city, with the development of the new Thomson MRT
line and the North-South Expressway. When fully developed, Woodlands Regional
Centre will provide an additional 100,000 jobs, boosting demand for housing.

IMPACT ON PROPERTY PRICES

In the past five years, the Government has launched tenders for
two private and three Executive Condominium land parcels in Woodlands that can
be developed into about 2,700 new homes. This is merely 2.8 per cent of the
total uncompleted pipeline supply of 97,742 units. More housing supply is
probably needed in Woodlands to support the growth in the jobs in the area.

At present, potential tenants looking to rent a private home do
not have many choices in Woodlands. The supply of condominiums is limited, with
only five projects having been completed in the area over the last decade or
so. Some tenants working in the industrial parks in Woodlands have to resort to
renting apartments and condominiums in Yishun and Sembawang.

Last year, the rental yields of District 25 (Woodlands) and 27
(Yishun and Sembawang) stood at 4 and 4.2 per cent, respectively, both
outperforming the islandwide average of 3.8 per cent. In contrast, the prices
of private homes in Woodlands have been largely underperforming those in the
Outside Central Region (OCR), or suburbs, for all types of sales. The mismatch
of capital value and yield could lead to appreciation in the home prices in
Woodlands Regional Centre, although volatility is expected over the next four
years amid the record completed units islandwide in both the private and public
segments.

In addition, a possible rise in interest rates could also put a
damper on price growth in the near future. Nevertheless, vibrant commercial
activities and job opportunities will increase the popularity of Woodlands over
the medium to long term.

Property prices in Jurong have been keeping pace with the
development in the area since the unveiling of the 2008 Master Plan. Prices of
non-landed private homes in Jurong have grown by 64 per cent since the first
quarter of 2008, outperforming the 58.5 per cent growth in OCR homes.

Home buyers and investors need not wait too long for it to happen
to Woodlands as long as Singapore continues to progress economically and stay
on its decentralisation course to enable more Singaporeans to live near their
workplaces.

DIFFERENT real estate investment trusts (Reits) employ different
performance fee structures with which to reward their managers. As private
investor Bobby Jayaraman, who authored the book Building wealth through Reits,
noted, there is no completely fair fee structure, but some do have more
drawbacks than others.

One of these drawbacks was brought to the fore and ''rectified''
earlier this month when the management of Cambridge Industrial Trust (CIT)
announced that it will revise the way it calculates its performance
fees. The revised methodology will effectively slash fees by up to 50 per
cent. This move was, unsurprisingly, lauded by analysts and unitholders.

The industrial Reit is one of just two Singapore-listed Reits to
benchmark its total returns (comprising change in unit price and distribution
per unit or DPU) against those of a basket of other Reits.

The only other Reit with a similar practice is Starhill Global
Reit which holds retail and office assets in Singapore and overseas. The
difference is that Starhill benchmarks itself to a much larger sample of 30
other Reits and trusts, compared to CIT's basket of less than 10.

HO BEE Land's first-quarter net profit tumbled 92.1 per cent to
$4.1 million from $52.1 million a year ago.

Revenue slid 71.9 per cent, from $60.8 million to $17.1 million,
for the three months ended March 31. This was primarily due to a lack of
recognition of revenue for development projects as there were no new sales in
the quarter and all units previously sold had been fully recognised at the end
of last year, the property developer said yesterday.

In addition, the group reported a gain of $47 million on the sale
of an available-for-sale investment in the first quarter of last year.

Chua Thian Poh, chairman and chief executive officer of the group,
cautioned that the residential property market in Singapore still faced strong
challenges. In line with the group's strategy, the group acquired another
commercial building in London, 1 St Martin's Le Grand, in March.

ASPIAL Corporation continues to expand its presence in Australia
with its third Melbourne property purchase this year.

The property, located at 54-64 A'Beckett Street, was acquired by
its newly set up subsidiary, WCL-A Beckett (Vic), from City Light Properties
for A$26.8 million (S$31.2 million). The price took into consideration its
location and development potential.

The freehold low-rise building sits on a 1,295 square metre (about
14,000 square foot) plot. The property currently has an active planning permit
for a new 49-storey tower, comprising residential apartments, serviced residence
and retail shops.

Located in Melbourne's central business district, it is near the
Royal Melbourne Institute of Technology, Melbourne Central Railway Station,
Melbourne Central shopping mall, Victoria

March resales down 7.5% at 20-month low, February
new home sales slump 14.5%

Source: Business Times / Wealth

AFTER a roller-coaster decade of boom-bust-boom, the US housing
market is going downhill just when many economists thought that annual sales
would be heading up. Sales of previously owned properties in March tumbled 7.5
per cent from a year earlier to the slowest pace in 20 months, while purchases
of new houses sank 14.5 per cent from February, according to reports this week.

Mortgage applications to buy homes plunged 19 per cent from a year
earlier, indicating slowing demand during what is typically the busiest season
for deals.

The housing market's underlying fragility is emerging as outside
influences that fuelled a two-year rebound are receding. Mortgage interest
rates are rising from record lows as the central bank withdraws its stimulus,
and investors, who had helped drive national prices up more than 20 per cent as
they went on a buying spree, are now retreating.

[WASHINGTON] Contracts to buy previously owned US homes rose in
March for the first time in nine months, in the latest sign the housing market
was stabilising after a recent wobble.

The National Association of Realtors said yesterday its Pending
Home Sales Index, based on contracts signed last month, increased 3.4 per cent
to 97.4. The increase beat economists'expectations for a 1.0 per cent advance.

These contracts become sales after a month or two, and March's
rise suggested home resales could rebound in the months ahead after stumbling
last summer following a run-up in mortgage interest rates.

"After a dismal winter, more buyers got an opportunity to
look at homes last month and are beginning to make contract offers," said
Lawrence Yun, the NAR's chief economist. "Sales activity is expected to
steadily pick up as more inventory reaches the market, and from ongoing job
creation in the economy."

[WASHINGTON] When Guy Wolcott got the Shazam app on his iPhone,
which identifies music and TV shows that are being played around you, it
inspired him to develop a similar service for people seeking to buy houses.

Mr Wolcott, the firm's chief executive, said that consumers like
Homesnap because it is as easy to use as it sounds: You simply snap a photo of
any home, irrespective of whether it is on the market, and you can immediately
access the best available data from multiple sources, such as the basic number
of bedrooms and baths, a recent tax assessment, the most recent property
records, school boundaries and school ratings.

If the home is on the market or has been recently, you can see all
the listing information, including interior photos.

[DUBAI] Emaar Properties, developer of the world's tallest tower,
is considering scrapping the listing of its mall and retail unit in London to
focus on Dubai, according to two people with knowledge of the matter.

The company is weighing an initial public offering on the Dubai
Financial Market (DFM) and seeking an exemption to float less than the required
55 per cent, the people said, asking not to be identified.

Emaar said last month it planned to raise as much as US$2.45
billion with a 25 per cent sale in London and on Dubai's Nasdaq exchange.

The company is considering several options for the share sale,
including the DFM, and will give more details once the plans are ready, it said
yesterday.

[SYDNEY] The Gardener's Lodge Cafe in Sydney's Victoria Park has
polished wood floors, Aboriginal art on the walls and customers tucking into
kangaroo-stout pies and sipping on macchiatos. All this betrays none of its
past: The 125-year-old sandstone structure used to be a public toilet.

"It doesn't put me off, it just adds a bit of character to
the place," Ben Andersen, 32, said over a cappuccino and apple crumble
among the outdoor tables of the cafe, which was converted

two years ago after
three decades of disrepair. "I'd never have guessed it used to be a
toilet."

Following a handful of such conversions over the past few decades,
several more may be on the way. The City of Sydney this month adopted a Public
Toilet Strategy that earmarked three more shuttered historic facilities. As
spending at eateries grows at double the pace of all Australian retail sales
amid worsening consumer confidence, the unused sandstone structures offer
would-be restaurateurs prime locations with unique history.

Gardener's Lodge, built in the late 1880s as a residence for the
University of Sydney's groundskeeper, was converted to toilets in 1911 and
served the public until the mid-1980s when they were closed.

[LONDON] UK house prices increased this month for a 15th month as
the momentum in the property market spread beyond London, said.

Values in England and Wales rose 0.6 per cent, the same pace as in
March, the London-based property researcher said in a statement. Some 48 per
cent of postcodes recorded an increase, the highest proportion in a decade.

House prices are being driven by record-low Bank of England
interest rates, a shortage of property for sale and a strengthening economy
that's creating jobs. Officials have said that they're monitoring the market
for signs price increases may jeopardise financial stability.

"The pick-up in the coverage of price rises is very
clear-cut," said Richard Donnell, director of research at Hometrack.
"Improving market sentiment and low mortgage rates are supporting
increased activity."

American Realty Capital Properties Inc. (ARCP), the largest owner of single-tenant U.S. buildings, is interested in acquiring NorthStar Realty Finance Corp., people with knowledge of the matter said.

American Realty is weighing an offer of about $20 a share, one of the people said, asking not to be identified discussing confidential information. That’s a premium of 25 percent to NorthStar’s closing price of $16.03 (NRF)last week and would value the New York-based company at about $6.5 billion.

There’s no guarantee that an agreement will be reached, one of the people said. NorthStar rose 7.3 percent today to $17.20. American Realty, based in New York, fell 3 percent to $12.62. The talks were reported earlier today by the Financial Times.

American Realty, led by Nicholas Schorsch, has used acquisitions to grow from a $67 million company when it began trading in 2011 to a national U.S. landlord with a market value of almost $10 billion. The real estate investment trust’s purchase of Cole Real Estate Investments Inc. in February for about $9.85 billion, including debt, made it the biggest owner of single-tenant buildings leased to businesses such as drugstores and fast-food restaurants.

A purchase of NorthStar would add to American Realty’s nontraded REIT fundraising and management business, which it acquired with its purchase of Cole. NorthStar also owns single-tenant real estate, manufactured housing and health-care buildings.

Spinoff Plans

NorthStar said in December it would spin off its asset-management unit into a new publicly traded company. It has also been building its health-care real estate business, bringing in former HCP Inc. Chief Executive Officer Jay Flaherty as a partner and agreeing in March to acquire a $1.05 billion portfolio of senior-housing and nursing facilities.

Matt Goldstein, a spokesman for American Realty, declined to comment. Joe Calabrese, a spokesman for NorthStar, didn’t reply to two calls seeking a comment.

Barry Sternlicht, chief executive officer of Starwood Capital Group LLC, said investors still have to prove they can efficiently manage scattered rental houses as they expand in a competitive market.

Buying homes to lease has gotten more difficult after prices soared in the past two years, he said in an interview on Bloomberg Television from the Milken Institute Global Conference in Beverly Hills, California. Sternlicht’s Starwood Waypoint Residential Trust (SWAY), based in Oakland, California, controls more than 5,000 rental homes, according to a January presentation to investors.

“It has gotten harder and you have to pick your markets,” Sternlicht said. “Certain markets you’re shut out of. We focused on Florida and Texas and California and stayed out of some of the wild markets like Phoenix and Las Vegas. Investors got so aggressive in those markets.”

Private-equity firms, hedge funds and real estate investment trusts have purchased as many as 200,000 houses during the past two years. They are seeking to profit from rebounding prices and rising demand for rentals among millions of Americans who lost properties to foreclosure or can’t qualify for a mortgage.

Capital costs for single-family rental homes aren’t higher than for apartments when adjusted for the amount of time people stay in the houses, according to Sternlicht. Apartments turn over faster and families in homes stay about two years, he said.

Investors’ Job

“There’s more single-family homes rented in the United States then there are apartments,” Sternlicht said in the interview. “Our job will be to prove that it can be done efficiently.”

Starwood Waypoint gained 0.3 percent to close at $27.13.

The company was spun off from Starwood Property Trust Inc., a Greenwich, Connecticut-based commercial-property investment and finance company, following a merger between Waypoint Homes and an affiliate of Starwood Capital Group.

The U.S. homeownership rate may fall to as low as 55 percent because more Americans are choosing to rent as they postpone getting married and having children, said Sam Zell, chairman of landlord Equity Residential.

Demographic and lifestyle changes, more than economic factors, are driving down the ownership rate over the long term, Zell said yesterday at the Milken Institute Global Conference in Beverly Hills, California. As of 2010, about 54 percent of adults were married, down from 57 percent a decade earlier, according to the U.S. Census Bureau.

“The deferral of marriage has such a staggering impact on real estate and I just don’t think people focus on it,” said Zell, 72, whose Chicago-based Equity Residential is the largest U.S. apartment landlord. “I don’t think the multifamily market has ever had a better set of future demographics.”

The homeownership rate fell to the lowest in almost 19 years, declining to 64.8 percent in the first quarter from 65.2 percent in the previous three months, the Census Bureau said today. Recovering home prices and rising mortgage rates have put real estate out of reach for some would-be buyers. Homeownership peaked at 69.2 percent in 2004.

The median age of marriage rose to 28.2 for men and 26.1 for women in 2010, up 1.4 years for men and 1 year for women from a decade earlier, continuing a trend of later wedlock that dates back to 1950, Census Bureau data show.

Postponing Children

Zell also cited reports of a growing number of women freezing their eggs to postpone having children while they pursue their careers. That delay will further reduce demand for single-family homes, he said.

Equity Residential (EQR) owns or has investments in about 110,000 multifamily units. Of the 18,000 rental apartments the company has in New York, 45 percent are occupied by single people, Zell said.

Contracts to purchase previously owned U.S. homes climbed in March by the most in almost three years, showing residential real estate was starting to stabilize entering the spring selling season.

The pending home sales index rose 3.4 percent, the most since May 2011 and the first gain in nine months, after a 0.5 percent drop in February that was smaller than initially reported, the National Association of Realtors said today in Washington. The median projection in a Bloomberg survey of economists called for a 1 percent increase. The gauge is 7.4 percent below a year earlier.

Housing demand has weakened since the middle of last year as rising prices and borrowing costs put ownership out of reach for some prospective buyers. An improving employment outlook and easier access to credit would help entice more house hunters to sign purchase contracts.

“The backdrop in general for housing remains reasonably positive,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics Ltd. in Valhalla, New York, who projected a 2.5 percent gain. “The labor market is improving, confidence generally has been edging up and mortgage rates are still pretty low.”

Estimates in the Bloomberg survey of 35 economists ranged from a 2 percent decline to a 7 percent increase after a previously reported 0.8 percent drop in February.

Stocks held gains after the figures, with the Standard & Poor’s 500 Index rising 0.7 percent to 1,876.24 at 10:04 a.m. in New York. The S&P Supercomposite Homebuilding Index advanced 2.7 percent.

NAR Projections

Purchase contracts fell from the year prior after a 10 percent decrease in the 12 months that ended in February on an unadjusted basis. Existing-home sales are projected to total just over 4.9 million this year, less than the 5.1 million in 2013, the trade group said.

The pending sales index was 97.4. A reading of 100 is equal to the average level of contract activity in 2001, according to the Realtors group.

Three of four regions showed an increase from February, with contract signings up 5.7 percent in the West, 5.6 percent in the South and 1.4 percent in the Northeast. Pending sales dropped 0.8 percent in the Midwest.

Economists watch the pending sales report for clues to existing-home sales, which are tabulated when a contract closes a month or two after being signed.

Buyer Traffic

“After a dismal winter, more buyers got an opportunity to look at homes last month and are beginning to make contract offers,” NAR chief economist Lawrence Yun said in a statement. “Sales activity is expected to steadily pick up as more inventory reaches the market, and from ongoing job creation.”

Sales of existing homes fell in March for a third consecutive month, dropping 0.2 percent to a 4.59 million annual rate, the lowest level since July 2012, the Realtors association said last week. Purchases were down 8.5 percent compared with the same month last year.

New-home sales also retreated as buyers balked at record prices. Sales dropped 14.5 percent to a 384,000 annualized pace, the slowest in eight months, the Commerce Department reported last week. The median price of a new house climbed 12.6 percent from a year earlier to a record $290,000.

Mortgage rates have risen along with prices, reducing affordability. The average rate for a 30-year, fixed mortgage was 4.33 percent in the week ended April 24, compared with 3.4 percent a year earlier, according to Freddie Mac. Mortgage rates remain historically low, however. Since 1971, they’ve averaged 8.5 percent, peaking at 18.6 percent in 1981.

Home Prices

Harsh winter weather at the beginning of the year further slowed housing as snow and frigid temperatures stalled construction and kept some buyers indoors. A pickup in housing demand may prove difficult as first-time buyers struggle to obtain credit and builders design new homes for a higher-end market.

At M/I Homes Inc. (MHO), a Columbus, Ohio-based single-family homebuilder, the average price of properties under contract rose to $326,000 this year from $290,000 a year ago, Chief Executive Officer Bob Schottenstein said.

“While we continue to believe that housing is in the early stages of a multiyear recovery, the spring selling season has gotten off to a slower-than-expected start,” Schottenstein said on an April 24 earnings call.

“We continue to believe that we’re in the early stages of a housing recovery that will last a number of years,” he said. “We’re optimistic not just about our business, but we’re optimistic about macro housing conditions.”